The agency problem is mitigated in practice through several devices.

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The agency problem is a common issue in corporate governance where the interests of the agents (typically management) may not align with the interests of the principals (typically shareholders). To mitigate this problem, several devices are used in practice such as performance-based compensation, board oversight, shareholder activism, and regulatory requirements. These devices help align the interests of agents with those of principals and reduce the agency problem.

The Agency Problem Is Mitigated in Practice Through Several Devices